Banking in the UK

The past few years have been a fairly traumatic period for the British banking system. High-profile government bail-outs combined with a series of scandals – including the misselling of payment protection insurance (PPI) and reports that certain banks have allegedly been manipulating financial data has severely damaged the once proud reputation of British banks.

However, the British government – and the banks themselves – have promised to tighten up the lax regulations which are viewed to have caused many of the recent troubles, so hopefully better times for the British banking system are just around the corner.

There are five main retail banking groups in the UK: HSBC, Royal Bank of Scotland (RBS) Group, Lloyds Group, Barclays and, to a lesser extent, Standard Chartered. HSBC, RBS, Lloyds TSB and Barclays all have visible presences in Britain, with branches found on high streets throughout the UK, while banks such as Natwest (the UK largest retail bank which is owned by the RBS Group), Halifax (owned by Lloyds) and the Woolwich (owned by Barclays) are also popular.

There are also banks that are owned and operated by some supermarkets, including Tesco and Sainsbury’s while the Post Office and some UK building societies also offer full banking services with Nationwide being by far and away the nation’s most used building society for banking purposes. Unlike other European countries, there are not that many independent banks in the UK – especially since the financial crash of 2008 which saw a number of independent banks nationalised and then sold off to other banking groups. In addition to the main British banks there are also a plethora of international banks that have significant presences in the UK especially in London and other major British cities.

The good news for people looking to open a bank account in the UK is that it is fairly easy to do whether you’re a resident or non-resident. Most of the larger banks offer specific accounts and services for those who are either newcomers to the UK or planning to move there soon. For example, HSBC offers the Passport account which is open to people who have the intention to move to the UK within the next three months or have moved there in the last 12 months. This account offers discounts on many travel-related products and international phone cards. It is possible to apply to open this account online, by phone or in branch. If you are applying by phone or online then once you have arrived in the UK you will need to bring one form of identification and one non-UK address verification to your local branch in order to activate your account. Barclays is another of the many banks which offers specific services for non-residents. Once again you can apply online or by phone to open an account and will need to prove who you are before it will be activated, but with Barclays it is possible to provide certified copies of the required items – a passport and recent utilities bill – by post without entering the UK.

It may also be worth checking with a bank in your home country that has direct links to the UK to see if they can offer any assistance when looking to open an account pre-arrival.

One of the biggest bonuses to banking in the UK is that most banks do not charge a monthly fee for holding a current account with them – although you may still be charged for some transactions and will almost certainly be fined heavily for entering your overdraft limit (if you have one). It’s worth noting that not all bank accounts are free from monthly service charges. Take the aforementioned Passport account at HSBC which incurs a charge of £8 a month although if you are able to open a standard Bank Account at HSBC then this is free.

Some accounts might also place certain criteria for you to meet to avoid being charged, for example the Classic Account with Vantage at Lloyds TSB requires that £1,000 must be paid into the account each month. A minimum balance may also be required to open an account (although this can often be as low as £1 and for a standard current account is unlikely to be more that £10). Free internet and phone banking is extremely common in the UK and most accounts will offer this service, while almost all accounts will provide you with a free debit card that can be used at ATMs and outlets throughout the country (maybe even the world). Depending on the type of card you have you may be charged when you using certain ATM machines, although you will be warned prior to withdrawing the money and can choose to cancel before you incur a cost.

In addition to current accounts, there are wide ranges of saving schemes available for those who wish to deposit money that they don’t need instant access to. Traditionally, building societies have been more popular among Brits looking to save money, although most banks also offer competitive saving schemes too. Money in savings accounts will earn better interest than that in current accounts, while products such as ISAs (individual savings accounts) offer even more favourable conditions – such as not being subjected to income or capital gains tax – although there will be strict rules regarding how much you can pay into it each year and when you can access the money. For a typical savings account you are likely to have to pay an initial investment in order to open the account. This fee varies greatly depending on the institution you use – for example, Nationwide charges a minimum investment of £1,000 while the Post Office requires just £1 (although the rate paid on the saving – AER – is significantly higher at Nationwide).